US tobacco bureau lost 420 million cigarettes

The US agency tasked with regulating illegal tobacco trafficking lost 2.1 million cartons of cigarettes that had been purchased undercover, according to the department of justice.

Photo: PA

By Brad Davies

12:32PM BST 26 Sep 2013

Agents working with the US Bureau of Alcohol, Tobacco, Firearms and Explosives made $162 million (£100 million) selling tobacco undercover, according to the report.

Before 2004, ATF used undercover agents to conduct its investigations and engaged "in business transactions that might normally be prohibited by federal law", according to the report released on Wednesday.

This changed when an existing law was amended "to grant ATF the same authority previously provided to the Federal Bureau of Investigation (FBI) and the Drug Enforcement Administration (DEA) to use the proceeds of its undercover operations to support its investigative work."

The report said that the $162 million generated by these operations was used to fund undercover operations between 2006-2011. ATF officials explained that the money was necessary to cover the informant's expenses.

Additionally, over the course of some 20 operations the ATF purchased 9.9 million cartons of cigarettes, but "inadequate documentation" led to the loss of 2.1 million cartons (420 million cigarettes) valued at $127m (£79 million).

Officials said the illegal cigarette trade could generate cash to rival the income from drug trafficking.

Inspector General Michael Horowitz has criticised the ATF and expressed concern at the "serious lack of oversight".

He wrote that in one unauthorised operation approximately $15 million worth of cigarettes were sold undercover over an 18-month period, in which one confidential informant was allowed to keep more than $4.9 million in profits.

ATF "misused the proceeds from churning investigations" and often failed to account properly for assets purchased during undercover operations, Mr Horowitz wrote in the audit.

The agency has a history of controversy. In 2009 it attracted criticism for another operation known as 'Fast and Furious' – a sting operation in which the agency lost, according to The Washington Post, an estimated 2,000 guns in Mexico. A US Border Patrol agent, Brian Terry, was killed in 2010 during a shoot-out in the Arizona borderlands in which guns tracked by the ATF were later found.